Agenda. Chilean electricity sector overview. Company overview. Financial profile

Transcription

1 December, 2011

2 Agenda Chilean electricity sector overview Company overview Financial profile 2

3 General Highlights SING SING Close to 100% of installed capacity based on coal, diesel and gas (including LNG). No exposure to hydrology Unregulated clients (mainly mining co s) represent over 90% of total demand Growth could be slower in near term: Large investments in green-field copper projects take time to structure SIC Exposure to mining sector growth Chile is a global, low-cost copper producer Low correlation between copper prices and SING demand for electricity Attractive industry Mature, 100% privatized market Stable, investor friendly regulatory framework Increasingly demanding environmental requirements and public opposition to generation projects Strong industry growth prospects Aysén and Magallanes Installed capacity AES Gener: 1,032 MW. Has an additional 416MW capacity in the gas turbine of its 643MW CCGT in Salta, Argentina, which is currently unavailable for dispatch to the SING ENDESA: 963 MW. 182MW from 100% Endesa-owned Celta, and 781MW from Gas Atacama CCGTs (50% Endesa/50% Southern Cross) ECL: 2,126 MW of which 53% is coal, 32% is gas/diesel and 15% is fuel oil/diesel

4 Exposure to mining sector growth Chile is a global, low-cost copper producer Low correlation between copper prices and SING demand for electricity. SING copper production (kt), SING Generation (GWh) and commodity prices (US$/lb, bbl) kt SING copper production (kt) SING demand (GWh) Annual average copper price (US$/lb) Annual average WTI price (US$/bbl) ,2 3,2 3,3 GWh Volatility¹ Correl. with energy output² 100 2, Copper Production 11.2% Copper Price 28.2% (0.40) , ,8 41 1, , ,4 1, ,0 19 1,0 30 1, ,9 0,9 31 1,0 1, ³ 0 Source: Cochilco, CNE, Bloomberg ¹ Measured as the standard deviation of the annual changes; ² Calculated as the correlation of the annual changes; ³ Annualized September 2010 data 4

5 SING: installed capacity and generation mix Gross installed capacity by technology (MW) Monthly generation (GWh) and energy prices (US$/MWh) GWh Coal Nat. Gas Diesel + Fuel Oil Hydro Spot Contract average¹ Gas restrictions from Argentina² US$ 350 US$/MWh US$ Diesel + Fuel oil LNG ST 3 Nat. Gas-Arg US$ 250 LNG + Diesel 800 US$ New coal Coal Hydro 600 US$ US$ E.CL Endesa AES Gener 1 Other US$ 50 Source: CDEC-SING (1) AES Gener has an additional 416MW of capacity from the gas turbine in its 643MW CCGT in Salta, Argentina, which is currently unavailable for dispatch to the SING. (2) Includes 182MW from 100% Endesa-owned Celta, and 781MW from Gas Atacama CCGTs (50% Endesa/50% Southern Cross). (3) LNG supply arrangement between mining companies, GNL Mejillones, E.CL, and Gas Atacama in place from through US$ 0 Source: CNE, CDEC ¹Average of contracted energy prices as published by the CNE 2 Gas restrictions started in 2004, but were more strictly enforced starting in

6 Agenda Chilean electricity sector overview Company overview Financial profile 6

7 Largest electricity generator in Chile s mining dominated northern grid (~ 50% market share) Installed capacity E.CL assets 18% 1% 1,796 MW % Chapiquiña (10MW) Technology Coal Diesel/derivatives Natural Gas Hydro 38% Diesel Arica (14MW) 16% Diesel Iquique (43MW) TE Tocopilla (1,004MW) Collahuasi 15% 0% 32% El Abra 37% Tocopilla port Chuquicamata 2,126 MW 2011 C. Tamaya (104MW) Gas transmission and Gaby distribution operations Coal Gas/Diesel Diesel & F.O. Hydro New Coal Mantos Blancos 1 (29MW) TE Mejillones (592MW) CT Andina 2 (165MW) CT Hornitos 2 (165MW) Escondida 2,449 kms of high voltage transmission lines Norandino pipeline to Argentina (Salta region) 1 Owned by a mining company but operated by ECL; ² Commercial operations commenced in

8 New ownership structure Chilean Pension Funds Other Chilean Institutional Investors Foreign Institutional Investors Other 52.77% % 12,18% 12.53% 1.82% (691 MW) Electroandina (1,105 MW) CTA (165 MW) CTH² (165 MW) Distrinor GNAC (4.5mm m³/day) GNAA (4.5mm m³/day) Electricity generation Gas distribution Gas transportation 1 Considers the 0.7% equity reduction due to retirement of treasury stock acquired by E.CL from shareholders that exercised their dissenter s rights in relation to the December 2009 merger. ² 60% owned by E.CL, with the remaining 40% owned by Inversiones Punta de Rieles (Antofagasta Railway PLC). 8

9 Average demand (MW) Long-term contracts with creditworthy customers Average demand¹ (MW) and remaining life (years) of current contracts Contracts average remaining life of 10 years Codelco (A+) Current contracts Committed contracts² Emel (BBB) BHP Billiton Freeport-MM (BBB) Barrick (A-) Antofagasta plc Other SQM Anglo American Xstrata (BBB) 0,0 3,0 6,0 9,0 12,0 15,0 18,0 Remaining life of contracts (years) ¹ Average demand based on 2010 energy consumption except for (a) Esperanza (Antofagasta plc) estimated using an 85% load factor over 150MW of contracted capacity and (b) Emel, calculated using average contracted energy over the life of the contract ² Contract with Esperanza (started in 2011) and Emel (starting in 2012) 9

10 Contracts pass-through main costs Pass through of PPA risks (based on contracted energy and capacity) 100% 1% Pass through Exposure 14% 80% 33% 35% 60% 61% 40% 99% 67% 100% 65% 86% 20% 39% 0% Fuel Maintenance NCREs RM-39 Changes in law Monthly indexation Source: E.CL E.CL s leading position and the system s growing energy requirements has allowed E.CL to include attractive pass-through clauses in most of its contracts significantly reducing its gross margin volatility Long-term power Purchase Agreements ( PPAs ) indexed to coal, LNG, fuel oil n 6, CPI and SING marginal cost PPA indexation matches E.CL s generation capacity 10

11 Driver s of E-CL s commercial policy Long- term contracts, reducing exposure to the volatility of spot market prices Tariffs indexed to fuel prices to mitigate the risk of potential cost increases. Definition of optimal level of contractual obligations, taking into account our generation capacity by type of fuel. 11

12 Investment highlights: Exposure to mining sector growth Potential future mining projects in the SING Company Proyect Capacity Demand- MW Full Capacityyr Antofagasta Minerals Esperanza 130MW Apr-2011 Antofagasta Minerals Antucoya 45MW 2014 Codelco Ministro Hales 80MW 2015 BHP Escondida OGP 80MW 2015 Collahuasi Collahuasi expansion Phase I-II MW Current challenges: Growth could be slower in near term: Large investments in green-field copper projects take time to structure; Significant electricity demand growth expected for 2015/2016 will require new capacity (and/or use of existing CCGTs) for at least 800MW: Quadra FNX s Sierra Gorda; Teck s Quebrada Blanca; Collahuasi s Phases I & II. Quadra FNX Mining Sierra Gorda 190MW 2015 Teck International PBX Ventures Quebrada Blanca Hip. 210MW 2016 Copaquire 80MW 2017 Action / Effects: Ongoing development of new 375MW coal plant and other projects: Subject to sign PPA for at least 50% Capitalize on near-term growth: 135MW of new demand from Minera Esperanza starting 2011; 200MW under EMEL contract starting

13 Investment highlights: Attractive expansion plan Current and expected base capacity (MW) 2500 Approx. 200MW commited LNG capacity to supply EMEL, starting 2012; Environmental approval for 2 x 375MW coal fired power plant in Mejillones + a port facility 2000 Availability to commit remainder gas capacity at LNG market price beyond MW of coal base generation in Current coal and hydro capacity CTA/CTH LNG Mejillones Expected base load capacity 13

14 New plants during 2011 already in commercial operations Central Termoeléctrica Andina ( CTA ) Central Termoeléctrica Hornitos ( CTH ) Characteristics Characteristics Gross capacity 165 MW Gross capacity 165 MW Location Mejillones Location Mejillones Total capex (inc. contingencies) US$496mm Total capex (inc. contingencies) US$380mm COD July 15, 2011 Contract Codelco: 150MW / 21 years Ownership 100% COD Aug 5, 2011 Contract Esperanza: 150MW / 15 years Ownership 60% CTA and CTH Capex breakdown (USD m, %) US$ 876 mm 100% 4% 75% 50% 96% 25% 0% Invested as of June-11 Pending Total 14

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16 Agenda Chilean electricity sector overview Company overview Financial profile 16

17 E.CL: Financial Results USD millones FY 10 9M10 9M11 Var. 9M% Revenues % Operating income (11%) Operating margin 21% 22% 17% - EBITDA (3%) Net income (30%) Energy sales (GWh) % 2011: The SING has been characterized throughout 2011 by the generation under test mode and later entry into commercial operation of new efficient coal projects. Since the end of July, marginal costs in the SING have decreased as a result of two main factors: (i) the decrease in the average electricity generation cost explained by the commercial operation of new and more efficient power plants and (ii) a temporary drop in demand from mining companies in July and August due to labor conflicts and weather factors. April 2011 CTH s PPA with Minera Esperanza commenced. July 15, 2011 CTA started commercial operations. Codelco PPA began. August 15, 2011 CTH began commercial operations. 17

18 Strong financial profile Sales (USD million) Sales breakdown (Sept 2011) sep Months Moving window Spot energy and capacity sales 3% EBITDA (USD million) sep-11 Costs breakdown (Sept 2011) 12 Months Moving window Spot energy and capacity purchases 17% Contracted energy and capacity sales 92% Other operating Fuel and lubricants Revenues 5% 50% Depreciation and amortization 10% Other operating costs 23% Total = USD 918 million Total = USD 760 million 18

19 coupled with a conservative debt structure Total debt/ebitda 3,0x Net debt/ebitda 3,0x 2,0x 2,0x 1,0x 2,1x 2,2x 2,2x 1,0x 1,6x 1,7x 2,0x,0x sep Months Moving window EBITDA/Interest expenses 25,0x 20,0x 15,0x 10,0x 5,0x,0x 23,2x 24,1x 17,0x sep Months Moving window,0x sep Months Moving window Credit ratings Investment grade international ratings by S&P and Fitch: S&P: BBB- (Stable Outlook) Fitch: BBB- (Stable Outlook) Investment grade local ratings by Fitch, Feller and ICR Feller: A (Stable Outlook) Fitch: A (Stable Outlook) ICR: A (Stable Outlook) 19

20 Contractual Obligations as of September 30, 2011 Payment due by period Debt breakdown by rate type (only principal amounts) USD m Total <1 Year 1-3 years 3-5 years More than 5 years Fixed rate (92%) Bank debt Bonds (144 A/Reg S Notes) Variable rate (8%) Accrued interest Total Bank debt: IFC/KfW: MUSD (CTA project financing) Total Principal = MUSD Bond: MUSD 400, 10-year, 144-A/Reg.S notes Low Debt Conservative maturity profile Access to different sources of financing

21 An attractive shareholder return E.CL Share (as of 12/05/2011): Market Cap: USD 2,700 bn Price: CH$ 1,312 Source: Bloomberg US$ 0,300 Return and Dividend per share US$ 0,250 US$ 0,200 US$ 0,150 0,243 30% payout ratio 0,189 50% payout ratio: dividend paid in 2011 on account of FY2010 = USD 100 million 0,15 30% provisional dividend on account of 1H11 net earnings USD 25 million US$ 0,100 0,075 0,095 US$ 0,050 0,024 US$ 0, E Note: EPS 2011 anualizado 21

22 Summary and outlook Largest electricity supplier in Chile s northern grid (SING) with a 52% share of the system s installed capacity Long-term contracts: contracts average remaining life of 10 years Largest electricity transmission company in the SING with 2,461 km of lines (35% of total kms of lines in the SING) Low Debt, conservative maturity profile and access to different sources of financing Commitment with sustainable initiatives Enhanced shareholder value 22

23 Esta presentación puede contener previsiones e información relativa a E.CL S.A. (en adelante E.CL o la Compañía ) que reflejan la visión o expectativas actuales de la Compañía y su administración con relación a su plan de negocios. Las previsiones incluyen, sin limitación, cualquier declaración que pueda predecir, pronosticar, indicar o implicar resultados futuros, rendimientos o logros, y que pueda contener palabras tales como creemos, estimamos, esperamos, el resultado probable, el efecto probable, prevemos y cualquier otra palabra o frase con significado similar. Dichas declaraciones pueden contener un número de riesgos significativos, incertidumbres y suposiciones. Advertimos que un número importante de factores pueden provocar que los resultados efectivos difieran materialmente de los planes, objetivos, expectativas, estimaciones e intenciones expresadas en esta presentación. En cualquier caso, ni la Compañía ni sus filiales, directores, ejecutivos, agentes o empleados serán responsables ante terceros (incluidos los inversionistas) por cualquier decisión de inversión o de negocio o cualquier acción adoptada por éstos tomando en cuenta la información y las declaraciones contenidas en esta presentación ni por cualquier daño derivado de ello. La Compañía no tiene la intención de entregar a los potenciales accionistas ningún análisis comparativo de las previsiones y los resultados efectivos. No puede asegurarse que las estimaciones o los supuestos se concretarán ni que los resultados de las operaciones o eventos futuros no diferirán de las estimaciones o supuestos contenidos en esta presentación. E.CL es dueño de esta presentación y de la información en ella contenida, la cual no puede ser reproducida o utilizada, en todo o en parte, sin el consentimiento previo y por escrito de E.CL.